Kottayam, March 20 Apart from demand-supply relations, factors such as crude oil prices, futures trading, and weather changes control the rubber market. Now, one more threat most likely to affect the domestic market is looming large — the large-scale import of tyre into the country, Mr Sajen Peter, Chairman, Rubber Board, told Business Line.
Against the import of 80,000 bus, truck tyres in 2002-03, the figures have now gone up to 13.28 lakh in 2007-08 and the import of tyres for passenger cars increased to 16.27 lakh from 1.94 lakh. This is equivalent to the import of 32,700 tonnes of natural rubber rubber into the country.
During the current fiscal, it is likely to reach alarming proportions. The truck tyres are mostly imported from China and car tyres from China and South Korea.
In India, there are about 43 tyre companies and their sale proceeds come to Rs 20,000 crore. Their annual production is around 811 lakh tyres. During 2007-08, the country exported tyres worth Rs 3,000 crore. The lions share of natural rubber is consumed by the automobile sector, especially tyre manufacturers. Therefore, any move in this sector would directly affect the rubber market in the country.
Duty impact
One of the major reasons for the increase in tyre import is the fall of import duty from 45 per cent 10 years ago to 10 per cent in 2007-08. Moreover, for China and South Korea who have signed the Asia-Pacific trade agreement, this will further decrease to 8.6 per cent.
But in Malaysia and Vietnam, import duty is 40 per cent and in Thailand and Indonesia it is 15 per cent. As a result of the global economic recession, the export from China to the US is dull and therefore, there is every possibility that China would try to export the tyre stock with them to India at a low price.
This is being viewed seriously by the Rubber Board. The market development committee which met in 2008 discussed the problem and recommended certain solutions.
The Board meeting convened in January 2009 also reviewed this important issue.
To control imports, the Board has recommended various measures to the government which included imposing anti-dumping and safeguard duty, inclusion of truck and bus radial tyres in the controlled list, enhancing customs duty, introducing quality control checking and inclusion of tyres in the negative list for tariff concession.
The rubber plantation and manufacturing industry are two sides of the same coin. Being an industrial crop, it is natural that problems arise but they can be overcome with intelligent and scientific planning, Mr Peter said.
Source : Business Line